HOW TO ORGANIZE A PRIMARY COOPERATIVE

Organizing a cooperative can be complex

and simple. It requires an understanding of the
basic needs of the prospective cooperative
members. It demands patience from the organizer who
must make the cooperatives long-term goals and
objectives and its visions a real part of the members lives.
But it can be too easy because the Cooperative
Development Authority has devised very clear-cut steps
for the cooperative organizer and members. This
questions-and-answer format should make organizing
cooperatives a lot more understandable to the
cooperative organizer.
WHAT IS A COOPERATIVE?
A cooperative is a duly registered association of
persons with a common bond of interest, who have
voluntarily joined together to achieve a lawful common
social or economic end, making equitable contributions to
the capital required and accepting a fair share of the risks
and benefits of the undertaking in accordance with
universally accepted cooperative principles.
By forming a cooperative, you pool money, human
resources and talent to build capital, and work together to
produce more goods and raise incomes. Through
cooperatives, you can look for other sources of loans at
low interest rates instead of borrowing from informal
leaders or usurers. The cooperative can also be a
mechanism for making your produce.

Republic of the Philippines
OFFICE OF THE PRESIDENT
COOPERATIVE DEVELOPMENT AUTHORITY
Dagupan Extension Office
3
rd
Floor, Siapno Bldg., Perez Blvd., Dagupan City
Tel/Fax (075) 522-8285
Email : cda_dagupan@yahoo.com
Website:www.cdadagupan.webs.com





GENERAL STEPS IN FORMING A COOPERATIVE
There are six steps suggested in setting up a
cooperative.
FIRST. Get organized. You must have at least 15 members
to do that.
At once determine the common problems you
would want solved and the basic needs you would
want provided for through a cooperative. You may
want to include increasing your production, marketing
your produce, credit assistance, power generation,
banking or insurance and other similar needs.
Determining your problems and needs will also help you classify the kind of
cooperative you will be organizing. Even before a cooperative is set up, a dedicated core
group of people who will do all the organizational and paper works is a must. From this
core group, working committees may be formed to set things moving. These
committees may include membership, finance, executive, secretariat to name a few.
SECOND. Prepare a general statement called an economic survey. This statement will
help you measure your cooperatives chances of success.
THIRD. Draft the cooperatives by-law. The by-laws contain the rules and regulations
governing the operation of the cooperative.
FOURTH. Draft the articles of cooperation. Here you indicate the name of the
cooperative, its members, term of existence and other pertinent description
about your cooperative.
FIFTH. Secure bond from your accountable officer(s), normally the treasurer, or the
treasurer and the manager. The amount of the bond is to be decided upon by
the Board of Directors, based on the initial net worth of the cooperative which
includes the paid-up capital, membership fees and other assets of the
cooperative at the time registration.
SIXITH. Register your cooperative with the Cooperative Development Authority (CDA).
You must submit four copies each of the Economic Survey., By-laws and Articles
of Cooperation, and Bond of Accountable Officers(s).
In every step, you may consult CDA. CDA emphasizes education as a key to the
success of cooperatives.




















HOW MAY BECOME MEMBERS OF A COOPERATIVE
If you are a Filipino, of legal age, you can
be a cooperative member if you meet the
qualifications prescribed by the cooperatives by-
laws
The board of directors act on application
for membership.
A member may exercise his/her rights only
after having paid the fees for membership and
acquired shares in the cooperative.
WHAT ARE THE TYPES OF MEMBERSHIP IN S COOPERATIVE?
A cooperative has two kinds of members; regular members and associate
members.
A regular member is entitled to all the rights and privileges of
membership as stated in the cooperative code and the cooperatives by-laws.
An associate member has no right to vote or be voted upon and is entitled only
to such rights and privileges provided by the cooperatives by-laws.
WHAT IS THE MINIMUM NUMBER OF MEMBERS IN A COOPERATIVE?


Fifteen (15) natural person of legal age
who are citizen of the
Philippines.


CAN GOVERNMENT OFFICERS AND EMPLOYEES JION A COOPERATIVE?
Yes provided that:
Any officer or employee of CDA shall be disqualified to be elected or
appointed to any position in a cooperative;


Elected officials of the government, except barangay officials, shall be
eligible to become officers, directors of the cooperatives;
Any government employee may in the discharges of his/her duties as a
member in the cooperative, use official time provided that the operations of the
office where he/she works are not adversely affected.
WHAT IS AN ECONOMIC SURVEY?
An economic survey is a general statement describing the structure,
purpose economic feasibility of the proposed cooperative, area of operation,
size of membership and other pertinent data. It is in fact, a project feasibility
study. The structure describes the kind of cooperative being set up, whether it is
primary, secondary or tertiary and whether it is a credit, consumer, transport or
any other type of cooperative.
The purpose defines the primary, secondary and other objectives of the
cooperative. The area of operation merely indicates the geographical or sectoral
scope of the cooperative. For example, a cooperative may operate in, say,
Caloocan City, or it may operate in a certain social sector like farmers. Size of
membership is important so as to set limits to the cooperatives scope of
operation. This is closely related to cooperative structure.
The most important part of the survey is the economic feasibility. Here
the prospective coop members estimate its incomes and expenses. It makes a
projection of the possible growth pattern of the cooperative over a certain
period, preferably three years, and how this growth generates income and incurs
expenses; it tries to anticipate possible obstacles and constraints and makes
allowances for them.
GUIDELINES IN PREPARING AN ECONOMIC SURVEY
1. GENERAL STATEMENT

Type of Cooperative
Area of Operation
Field of membership
Indicate the membership qualifications, size
Structure of the Organization
Membership Potential
Indicate initial number of members and the projected increase

2. RATIONALE

State the justification for the establishment of the cooperative.
Discuss the necessity for the formation of the cooperative.

3. GOALS AND OBJECTIVES

State the purpose of the cooperative, general and specific.

4. ECONOMIC ASPECT

State the background information on the economic situation of the proposed
area of operation in relation with the contemplated business activity/activities
of the cooperative.

State the economic prospects: survival chances, competitiveness and the
probability of success of the proposed cooperative.

Basic assumption on the services of the proposed cooperative. Projected
volume of business/or capacity of its facilities to serve the members.
Market behavior of the proposed business activity/activities.
Demand and supply of the product to be marketed.
5. TECHNICAL ASPECT

State the human power requirement of the proposed business activity/activities
if the cooperative and the organizations capability to meet those requirements.

Expertise in the field that requires specialized trainings/experiences.

Machine capacity and its capability to cope with production requirements of the
business, taking into consideration the demand for the product.

6. FINANCIAL ASPECT

Source of capital and uses thereof as well the mobilization of such funds.

Illustrate in financial (Peso value) form the assumption under economic aspect.

Financial projections such as:

a. Projected balance sheet;
b. Projected income statement (profit and loss statement);
c. Projected cash flow; and
d. Return on investment (ROI).

7. MANAGEMENT ASPECT
Discuss the organizational structure of the cooperative and the number of
personnel/staff required and compensation of hired employees.




8. WHAT DOES THE ARTICLES OF COOPERATION CONTAIN?
The Articles of Cooperation is a duly notarized document that legally
binds all the signatories in the formation of a cooperative.
It should contain:

a. the name of the Cooperative
b. the type and purpose(s)
c. the goals of this cooperative is to help improve the quality of life of its members
and in furtherance thereto shall aim:

1. To attain increased income, savings, investments, productivity, and purchasing
power, and promote among themselves equitable distribution of net surplus
through maximum utilization of economies of scale, cost-sharing and risk-
sharing;
2. To provide optimum social and economic benefits to its members;
3. To teach members efficient ways of doing things in a cooperative
manner;
4. To propagate cooperative practices and new ideas in business and management;
5. To allow the lower income and less privileged groups to increase their ownership
in the wealth of the nation;
6. To actively support the government, other cooperatives and people oriented
organizations, both local and foreign, in promoting cooperatives as a practical
means towards sustainable socio-economic development under a truly just and
democratic society;
7. To institutionalize a dynamic savings mobilization and capital build-up schemes
to sustain its developmental activities and long-term investments, thereby
ensuring optimum economic benefits to the members, their families and the
general public;
8. To implement policy guidelines that will ensure transparency, equitable access to
its resources and services, and promote the interests of the members; and
Note to the Trainer:
Remember this is only a guideline: you may add, revise or
omit items that are not applicable to your proposed
cooperative.
9. To adopt such other plans as may help foster the welfare of the members, their
families and the community.

d. the powers, rights and capacities of this cooperative are those prescribed under
Article 9 of Republic Act 9520.
1. To the exclusive use of its registered name;
2. To sue and be sued;
3. Of succession;
4. To amend its articles of cooperation in accordance with the provisions of RA
9520;
5. To adopt by-laws not contrary to law, morals or public policy, and to amend and
repeal the same in accordance with RA 9520;
6. To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage,
and otherwise deal with such real and personal property as the transaction of
the lawful affairs of the cooperative may reasonably and necessarily require,
subject to the limitations prescribed by law and the Constitution;
7. To enter into division, merger, or consolidation, as provided under RA 9520;
8. To form subsidiary cooperatives and join federations or unions, as provided in this
Code;
9. To avail of loans, be entitled to credit and to accept and receive grants, donations
and assistance from foreign and domestic sources subject to the conditions of
said loans, credits, grants, donations or assistance that will not undermine the
autonomy of the cooperative. The Authority, upon written request, shall provide
necessary assistance in the documentary requirements for the loans, credit,
grants, donations and other financial support;
10. To avail preferential rights granted to cooperatives under RA 7160, otherwise
known as the Local Government Code, and other laws, particularly those in the
grant of franchises to establish, construct, operate and maintain ferries,
wharves, markets or slaughters houses and to lease public utilities, including
access to extension and on-site research services and facilities related to
agriculture and fishery activities; and
11. To exercise such other powers granted under RA 9520 or necessary to carry out
its purposes as stated in this articles of cooperation.

e. the term of existence
f. the area of operation
g. the common bond of membership of this Cooperative
h. The name and postal address of cooperators
i. the number of Directors of this Cooperative
j. the Authorized Share Capital of this Cooperative
k. Subscribed and Paid-up Share Capital
l. Arbitral Clause

9. WHAT ARE COOPERATIVE BY-LAWS?
By-laws are the set of rules that defines and determines how a
cooperative is to be run without confusion.
In general, by-laws should be consistent with the provisions of the
Philippine Cooperative Code of 2008 (RA 9520). The by-laws include:
a. The purpose(s) and goals of this Cooperative are those set forth in its
Articles of Cooperation;
b. Membership;
c. Administration;
d. Board of Directors;
e. Committees;
f. Officers and Management Staff of the Cooperative;
g. Capital Structure;
h. Operations;
i. Allocation and Distribution of Net Surplus;
j. Settlement of Disputes; and
k. Amendments